But until recently we hadn't seen much a real-world effect from
negative rates. Now, thanks to Bank of America Merrill Lynch and
Citi, we have some hard numbers showing that negative rates are
indeed having an effect.

First, here is a chart summarising the negative rates imposed by
the central banks of Denmark, Switzerland, Sweden, and the
European Central Bank:

Citi

Now here is a chart from Citi's Willem Buiter and his team. It
shows that after those negative rates were imposed, more cash did
appear in circulation:

BAML

One fear was that banks might simply lock away cash in
strongboxes to hide it from negative-rate accounts. That didn't
happen. But Buiter isn't convinced the increased volume of cash
is all to do with the policy of negative rates:

Growth in currency in circulation — a bearer instrument that pays
a zero nominal return — has picked up somewhat but so far remains
within historical norms (see Figure 27). It is possible that
moral suasion by the central banks, supervisors and regulators in
Sweden, Denmark and Switzerland may have convinced banks in these
countries not to invest heavily in large safety deposit boxes.

So time will tell.

But the effect on mortgage pricing in Switzerland (below) seems
clearer. Switzerland may be furthest down the path of
transferring the cost of negative rates to consumers. One
consumer bank, Alternative Bank Schweiz,
has already told people it will apply negative interest to
customer accounts in 2016. The fear around negative rates is
that they might have the opposite effect of that which is
intended — that banks are afraid of charging consumers negative
interest, so they will impose those costs in other formats.

This chart shows how the interest rate on mortgages in
Switzerland has gone up since central bank rates went negative: